tv Bloomberg Markets Middle East Bloomberg July 31, 2016 12:00am-1:01am EDT
revenge.e, not turkey's president says he won't pursue cases of so-called personal insult over the failed coup. said to signhina off on saudi arabia's $10 million bond sale, part of its biggest foray outside asia. opec's new chief takes charge as oil prices slip again, sending to reopen division over strategy.
in dubai, 5:00 a.m. in london and midday in hong kong. welcome to the program. we have plenty to get through on the show. what we have been seeking is a strengthening of the turkish currency below the u.s. dollar. that off the back of some consolidations and relative stability. a lot of this depends on whether the political turbulence goes antigen direction. we are waiting on a decision that put her delon review. that assessment on august 5. that greenline is your 100 day moving average. bottombottom and, -- the end, you can also pull it up on your bloomberg, this is a relative strength indicator. what it tells us is whether a certain as it is oversold or overbought. you can see that
consolidation slowly trickling. just to give you some perspective, as to the consolidation. this is your w crs function. yes the turkish lira has been one of the worst performing for currencies on a day-to-day basis. changing arranged to five days you can easily see how that improves. that the turkish lira becomes one of the best-performing currencies. bear in mind the four investors told a total of $364 million of stocks near july 22, according to the central bank of turkey. another big thing on watching is news when it comes to the oil markets. we have data from the baker hughes index and once again it shows the u.s. producers are adding to their rate fleet. and a chart for you to pull up easily on bloomberg. this one is color-coded.
the lines and bars in blue are increases in your rig count, and decreases. for the fifth straight week, you have increases in u.s. rig count , 374 rigs. that is your crude oil price which remains under pressure. my view, were talking about 19% that oil is down since june. 20% is what constitutes a bear market. that is going to be a major factor in a lot of our discussions of the program today. with see how things are went up on wall street. next closed after the u.s. gdp was worse than expected 1.2%. the s&p cap its fifth straight points gain to end 2 below its all-time high. the dow closed slightly down, but the nasdaq in the green.
the index surged 7% in july. in the middle east, just under two hours away from the opening of the emirates markets, dubai and abu dhabi. in dubai, stocks gaining for the most part. carmax was up 34 -- remix was up -- that continuing to be one of the out performers in that lasted training session. abu dhabi below the flatline. qatar gaining 4.5 of 1%. the other story is saudi arabia. this is the worst performer in this part of the world compared to its peers. one ofasic industries, the largest companies by market capitalization, waiting in after earnings appeared to have disappointed most investors. of course egypt, commercial and international banks. that company makes up 40% of egyptian stock exchange. reporting earnings on thursday,
investors seems to be-- stock driving gains up 4.5% in one trading session. let's check in on the first word headlines. from around the world, here is elliott. >> turkey is joining the global tax crackdown with a final free opportunity for citizens to repatriate money held overseas. the move comes ahead of a push by g-20 countries to shut global loopholes. the numbers are due to start sharing intelligence on tax avoidance. turkey's economy relies largely on foreign capital to finance its current account deficit. two top officials from the federal reserve downplayed friday's week gdp, so you -- saying two rate hikes is still possible. john williams says there's more data to come that could support the case for a pair of rate increases. robert kaplan echoed his comments but says the economy still faces major challenges.
>> as difficult as the last eight years have been, recovery from the 900 -- from the financial crisis. this period will be as or more difficult and as tricky, and how to normalize monetary policy is going to be challenging. singapore central bank says it's investigating a goldman sachs unit involvement with bonds deals by malicious embattled state -- malaysia's embattled state fund. there is promised decisive action against any institution or individual having found reached the regulations or money laundering standards. goldman sachs declined to comment. the nas named -- mas named four banks accused of money-laundering and seized millions of dollars in assets. the beer industry's biggest
acquisition has cleared another hurdle. miller's board has unanimously accepted ab invest takeover after a be valid to raise its bid to a hundred $4 billion. factoring in the pound plunge following the u.k. decision to the the european union. shares in both companies ended the week on a high. take a global news 24 hours a day howard by 2600 journalists and analysts in a hundred 20 countries. this is bloomberg. president says he will drop all cases of so-called personal insult, saying he wants justice. let's get more on this with bloomberg news middle east economy at her.
developmentslatest investors need to know about? >> more than that, the biggest development investors are focused on is turkish officials escalations in terms of rhetoric against the u.s. we saw the president's accusing the u.s. of being behind this, attacking one of the top who lamented that the purge after the coup took out a lot of u.s. interlopers in the fight against isis. of course other turkish officials picked up on that. there is a marked increase in tension. i think that's something investors will watch. in terms of dropping the cases, maybe it's difficult to figure out why. be a gesture to the eu because this has been one of the tension points. or domestically, just to ease this tension that happened after the coup. >> the other thing we are watching is how the latest
developments affect the foreign policy front for turkey. are we going to see a shift closer to russia and away from the west? >> this is interesting because it's a good question, it's actually happening when turkey is warming up to rush again. -- up to russia again. when turkey shot down a russian aircraft there was a significant deterioration in ties. but this seems to be water under the bridge. to what extent this shift can be is difficult to determine. let's not forget the turkish army is nato's second-biggest after the u.s., almost entirely armed with u.s. technology. it is very difficult to actually make an entire shift, or to see closer relations. maybe more deals like egypt after 2013. diversifying its purchases from france and russia. making a complete u-turn is
difficult to say. >> thanks. let's get more perspective on the turkish situation. joining us is a director and partner at cornerstone global associates. what do you make of the association as it stands interesting? >> turkey is in flux. it's changing its perspective internally and regionally. in the next few weeks, turkey will be different than we know it now. so you have a more assertive turkey that will have better relations, with russia israel, and other countries but worse relations with others. i think turkey is going through a redefinition process that will take weeks and months. >> from what we are seeing in turkish asset classes, there seems to be a sense of relative stabilization, even if it's temporary relief. there seems to be a signal, this is how low it goes, let's see where the political direction
goes from here. is that your sense as well? what defines direction for turkey? -- tos related to find define on how asset classes will go. the markets still don't know what's happening, let alone how they react. this is just a temporary relief and it will take weeks and months. this is just short-term recovery. borders, the turkish what kind of regional impact can we draw from the turmoil in turkey on the gcc? does anything change in the way business is done? >> trade relations are important. i think what you see is that turkey will become more assertive politically. it's not involved in some clicks and others heavily like syria. closer.l have to be
turkey is the largest sunni state in the nation. i think they will have to become more assertive and redefine the way it has worked with other countries in the region. i think this will take weeks and months to unravel. i think it will be a more .ssertive turkey >> we keep hearing rhetoric from both sides that seem to point towards cracks in the relationship between turkey and the west. is that something that concerns you or you see escalating? >> relations between the eu and turkey have deteriorated. turkey seems to be more comfortable on its own. over the next few weeks, we are
in a state of flux. we have seen great attentions to turkey and the west, nato. besides israel, turkey is the only one that is in oecd country. you don't see a complete decoupling. it's still part of the west and nato. there will be greater tension between turkey and the rest of the west. >> we will continue the conversation shortly. you're sticking around, still a lot to get through. let's get more from the story of the bank of china making it bigger foray outside asia with the rollcall managing bond sales. including a 10 bollard -- $10 billion issue. what do we know at this point? >> bank of china is making big inroads into the middle east bond mandate space.
desireseeing the clear by not just chinese banks, but the bank of china is state run, so this is officially sanctioned strategy, but not just chinese banks but also japanese banks coming into this space clearly sing the middle east as an area for future growth. to stick down their tentacles so they can get a better chunk of this business going forward as time of lowf this yields. negative yields in many places. but it's been part of the story. -- some of these a sovereign sellers and kazakhstan, not the middle east, but one of those growth countries where mandates and getting mandates for bond deals is seen as lucrative. who stands to lose on this? >> i think the larger banks.
the ones that have been the established names within this business for a long time. we are looking now at bank of america, deutsche bank, london, these are seeing bank of china, mitsubishi. obviously japanese banks, but these coming into the space increasingly seeing that this is a place where they can get yields done. they can look to sell these securities in their home markets where yields are, if not low, negative. this is seen as lucrative for them and for the buyers of the bonds. it is a kind of win-win situation for a lot of people. >> thank you for stopping by. still lots more ahead on bloomberg markets middle east. and laterking brexit, an in-depth look in halliburton's departure from the eu may affect the real estate market -- look at how britain's
>> welcome back. you are watching "bloomberg markets: middle east." we are with a partner of globe -- partner of cornerstone global associates. we talked about turkey, now let's talk brexit. we've talked to decision-makers and interpretation has been mixed as to whether there will be a lasting impact. even from a political perspective. what's your take on it? >> one thing you need to understand is that britain in the middle east have a longer-term relationship. britain as part of the eu has the strongest relations with the region. i don't think britain out of the eu will weaken british arab relations. on the contrary, the eu will have to use britain to maintain
strong relations as possible. relations between the region and britain will get stronger. i think britain will become more interested in establishing stronger trade deals, political understandings with various countries more than before. you have stronger arab british relations and the eu will have to find a way in order to fill the gap with britain leaving. >> it sounds to me that you are seeing a lot of upsides to the brexit story. that means in your opinion the gcc welcomes brexit. >> it's not about welcoming but repositioning itself with everything that -- >> the question remains, is the gcc better off with brings it? -- with brexit? >> it's not better or worse. in the short-term, for example, if you are a gulf state with
investments in britain, obviously your investments have lost 10-15% in the past month, so you're not happy. on the other hand, there are more opportunities to go into britain. this is a long-term thing rather than a quick short-term one. in the long-term, yes, it's in the interest of the gulf that britain is out of the eu. it will have a greater possibility for stronger relations, both politically and economically. >> what happens with arab investments in the u.k.? >> as we said with the drop of the pound, if you are a us-based economy like the gulf, your investments have lost 10-15%. so i think the opportunity is for great of the greater arab investments in the u.k. economy. scotland as well, which has the risk of referendum on scottish independence. you have more arabs looking at as an investment destination in
the u.k. arab investments in the next few months will eventually increase in the u.k. >> you see the u.k. stepping into where the eu has so far failed in relations with the gcc? i'm thinking along the lines of the free trade agreement. >> absolutely. the u.k. wants to establish free-trade agreements around the world. that can't happen while the uk's in the eu. i think we will see the u.k. trying to establish free-trade agreements. >> what's the biggest risk for this part of the world as rexit continues to unfold. a lot is still shrouded in uncertainty about the process and timeline. so much uncertainty that even with the upside, there are plenty of downsides. >> absolutely, especially the effect on the global economy. it is not going to be affected as a region because of brexit, but part of a domino effect on
the global economy. >> perhaps the other big risk in this part of the world is coming from ongoing foster relations with argon and the gcc. -- with iran and the gcc. as iran opens up to the world and the sanctions ease, how can there be room for reinstatement, or is that even on the table? >> iran has always been in the region. it's not a new country, but now it's redefining itself. on one hand, establishing stronger ties, and unlike the rest of the gcc. i mean the gulf and iran have had interesting relations and a lot of tension, but a lot of collaboration and tension. will have to be seen on how
this will be played out in terms of iranian-american relations and how this will affect gulf-iranian elections. -- gulf-iranian relations. >> always a pleasure having you on the program. still to come, why soda stream it bulls are feeling the fizz when a rival to the israeli-based company pulls the plug. details from tel aviv next. this is bloomberg. ♪
that are turning soda stream's fortunes around. they vacated a controversial factory in the west bank and consolidated operations in a make a factory in southern israel. that has helped them to save costs in terms of their production. at the same time a year ago they changed strategy. they traditionally pitched themselves as a alternative to coke and pepsi to make your fizzy drinks at home. they are now pitching themselves as a water alternative, to make your water more exciting. that seems to be working with earnings reading expectations in the second quarter. finally it certainly has not harmed sodastream's prospect curated --ompetitor keurig mountain has bowed out of
the market. shares are up 13% for sodastream. the shares are up by one: third. certainly they seem to be going in the right direction. sodastream trades in new york and israel, so they will be trading later this morning as well. >> rumors of a possible takeover are just not going away. do we know anything more? elliott: no. earlier this month there were rumors that pepsi might be taking over. they have all fizzled out.
.eleased 758 soldiers civil servants have been sacked in a post-coup purge. it a lot has accused u.s. central command of siding with the co-plotters, deepening the rift. making itsna is biggest ever foray outside asia with a new managing bond sales including a $10 million issue. they have told bloomberg the state-controlled lender has emergingee mandates to markets eurobonds. bank of china is one of nine underwriters hired by the kingdom. be watching out for sodastream or earnings this tuesday after its main rival quits the cold beverage market. droppeda backed keurig its appliance after a troubled rollout.
have surged since may 1 sodastream announced that it than expected profits and revenue. opec's new boss starts work tomorrow against a backdrop of sinking oil prices. he will also be leaving an organization that has been divided over. let's get more with bloomberg news energy reporter who joins -- live from singapore. opec's first new official in a decade. how has the oil industry changed in that time? >> it has gone through some massive changes. think back to 2007 when mom it's predecessor took over. demand is rising in china and people were searching for where the new oil was going to come from to meet demand. prices are skyrocketing to the hundred 40's in 2008. now it cannot be more different
in this glut of oil from new production on u.s. shale wells and canadian tire stands. watch soil and prices have responded down into the 40's is the end of last week. >> what are some of the key ?hallenges that opec faces it is a divided spectrum. >> absolutely. he is going to deal with low oil prices which hurts all oil differentbut it hurts producers differently. there are several members of iraq,ike nigeria, venezuela that need oil prices more badly the in a country like kuwait or saudi arabia and that is what opec has been dealing with for two years. saudi arabia has been driving a policy to keep pumping out as much oil as they can to drive down prices and not give a
subsidy to u.s. shale and canadian. but countries like nigeria are -- and venezuela especially -- where people are lining up to cross the border just to buy groceries, they are desperate for higher oil prices. so trying to bridge that divide between these two sets of classes of members will be his greatest challenge. >> what kind of background those bar bring to the role and will it help in anyway? >> we will have to see obviously. mohammed bartender was the hammed barkindo has the experience of working with other members of opec. he is is at citibank said
a great negotiator who can listen and try to pick up where different sides might find a little bit of common ground. those qualities will help them in this job. whether he is going to be able to surmount these larger obstacles facing opec remains to be seen. >> thank you for the perspective. let's get our viewers up to speed with some news hitting the bloomberg reporting earnings. millionn at 445 point versus an expectation of 502 million durham's. dirhams. in 460. coming profit be clear, the net for the second quarter coming in at a miss for the estimates.
versus the estimate of 460 million. 35.3% and we will see how investors react when it comes back online shortly. let us check in on headlines. >> tunisia's parliament has passed a vote of no-incidents dissolving the countries government. the motion against the economist, seen here visiting libya and make, passed by 118 votes. the birthplace of the arab spring revolt. unlike europe, and yemen, syria, and libya, it has been able to maintain its parliament terry democracy. terrorism has demolished the inflationdustry and remains high. syrian media says dozens of families have escaped a deceased area of aleppo through
humanitarian corridors. this is to help some of the 330,000 civilians trapped in the fighting in the biggest city. the aid agencies had been calling for such a move. they say it is a ploy to retake the entire city. elgin prosecutors have charged a 23-year-old man with an attempt to commit a terrorist murder. they gave no further details. brussels remains on its second withst state of alert soldiers patrolling train stations, shopping areas, and public gatherings. , prosecutorstack say, is not related to the metro at tech. moving onto banks, the world oldest lender has failed stress tests carried out by european regulators. they say now it plans to sell as much as 5.6 by dollars of stock of it can offload a bad loan
portfolio despite fierce. the third bailout since 2009. the italian treasury says it will not the necessary. minimumo felt below the level required by regularly fits. 2600l news powered i journalists in 20 countries. this is bloomberg. and imf am -- delegation has arrived in egypt. egypt is hoping for a loan to shore up its flagging economy. market has been lots of euphoria. default swapsdit still fairly stable for those five-year benchmarks. pointight be the sticking as in egyptian authorities and policymakers go into meetings. points. controversial
chiefly, the devaluation. a near consensus it is undervalued. even the central bank governor the valuet defending of the pound over the past five years at the expense of the dollar resources had been a grave mistake so he was looking for another round of devaluation. to what extent, is it going to be gradual and how would the egyptians react, because as you know this is a hot topic. people are watching the black market trades. be one of the controversial points and there are other issues like electricity subsidies and how far do they go and how gradual do they go and how well each of to be able to heal those who need the subsidy in the short term because they are needs to be immediate measures of these are two sticking points. >> the government has sent out a
bonds. for proposal for a they trying to capitalize on the positive sentiment in the market right now? >> yes. they told us is, last week they hope we have a good story for the market says they clinch the imf d. they said it was to tap the bond market again. it is always subject to market conditions so they want to go to investors and say we have a 12 million imf loan and a supervised program. with imf supervision or support. they want to bring the basis down. i think last time it was north of 6% said they want to try and bring it down. bags we will keep a close eye on that. thank you for stopping by with perspective.
let's take a look at some of the events we will be watching over the coming week. on tuesday, japanese cabinet decision on fiscal stimulus package. the prime minister unveiled it last week. trying to270 billion spur growth and inflation. secondly, the boj extended its stimulus program on friday. the economists expect the iba to cut interest rates on tuesday. australia's essential bank was candidate smoldering gun last week was subdued orderly inflation figures. they have pushed their bets on a cut from august back to november. and second quarter earnings on wednesday with investors watching for the impact of the brexit vote. 10-18% to estimate by
reflect slower u.k. growth. toyota will report its first-quarter earnings on thursday. .he rising yen has been eroding reported last week, both saw a drop in profit. still to come, uncertain times. we will ask the world's leading real estate investment firm about how brexit will divide the property market. this is bloomberg.
of 14% in june. trying to build up for x reserves and quash a currency black market where the pound is trading against the u.s. dollar at around the 20% discount from its official rate. iran says it has returned oil out what to 80% of levels. communications minister says another 2-3 months is needed before production is fully restored. after meetingscow russia's energy minister. to discuss new projects with companies soon. ubadala iss is
said to gain an almost 10% stake immediately with a further 10% once the deal wins regulatory approval. the investment fund will get a a board and is looking for other institutional investments. >> let's get back to the real estate market. joining us for a closer look as greg, head of media and research with jones-lang, lasalle. we talked earlier about the impact of brexit and we had views on how property is holding up. what do you see? >> brexit has had a muted impact of far. uncertainty. investors do not like uncertainty. it has slowed down decisions. decisions.me overall, not a huge impact. main impact on u.k. investors and they are about the third-largest group of investors in the dubai residential sector. yiddish% are two
nationals. so there been issues and obviously with the falling value of the pound which has been a consequence of brexit, it has made to buy relatively more expensive but overall not a huge deficit. >> is there a sector more vulnerable? hotels, residential, commercial? >> these are the private investors only active in the residential sector so brexit itself is not had much impact other than residential sector. >> the other risk is coming from oil prices which remain relatively low, i mean we are off 19% since june. that affects dubai indirectly and a lot of investors come from countries that are fueled light healthy oil prices. that is no longer the case. what has been the impact because we is broken to decision-makers and they are seeing a tightening, a gradual slowdown of consolidation. we've seen mergers. what are you reading?
>> dubai is being impacted less than the other markets in the region as you would expect. the dubai economy is more diversified said the impact of the continued time of low oil prices has been more evident in saudi and abu dhabi. we've seen jobs cuts and to some significant impact of lower oil price was dubai, it is more diversified. ,he financial sector work hotels, tourism, real estate, more diversified. yes, negative but not as much as the rest of the region. greg stories submit is a key point was -- >> tourism is a key point. i am looking at a note. a brokerage is saying they andeve that the weaker euro falling crude prices, macro headwind had an impact on dubai tourism.
is that headwind going to continue into q3 and q4? i ask you as we think so. the hotel market has suffered. 15%.rmance off occupancy rates have held up but at a lower average room rate and that is not necessarily a thing because dubai was becoming too expensive and even the department of tourism was recognizing and trying to push prices down to make to buy more competitive and the dollar has not helped. the strong dollar against the euro and other currencies. we expect the headwind us to continue. radar, ats of risk the top of that on your list is the vat that is said to be introduced. what kind of impact will that have? why are you sleeping less at night? >> vat obviously is something we will hear more about over the
next couple years. the egyptian government is pushing forward their lands for vat for 2017. for uae and saudi we are looking at 2018 is a start. the main sector that will disadvantage is retail. retailive effect on the sector and hotels will suffer slightly as well. pushing prices up for consumers for investors in dubai. >> thank you. still to come on the program, the stimulus sugar high. find out why morgan stanley previous research about the cash snatch. this is bloomberg. ♪
gives it a sugar lining. that is according to the global chief and head of emerging markets who spoke to bloomberg about the challenges facing it. t-rex we have lost counts of how many stimulus plans japan has had over the last 15 or 20 years. these give markets a sugar high. he on that, they do not do much. it goes back to what is the problem with the underlying community. it is about demographics. if you look at the per capita in income of japan versus the united states over the last 10 years it is similar. but the growth rates have been different because the u.s. has bettered them graphic son japan. going further, there is a problem with that activity and a closed system but the fundamental problem is that people do not recognize that rate is barely
one half of 1% and that is because the major drag is consistently in reverse. policy, theary economics is a dollar yen and where it trades. say, the per capita gdp, it is a rich country. it is a central bank trying to solve the problems in an economy cratering? no. it is an incredibly rich country. how should we view japan? how should the authorities view their own country? >> recognize the growth rate as a function of two things. if it is contracting, you cannot get a growth rate of more than one half of 1% and it has to be a basic greg nation as far as japan as concern. it requires some deep changes. there are a couple of ways you can counter the major
demographic headwind. increasing the participation of women in the workforce. that has happened and gone up. the second thing is immigration. on that front, we are seeing de-globalization and japan never really accepted immigration. atis hard for japan to grow half a percent to end the stimulus policies are a distraction because there are will abenomics that increase the participation of women in the labor force but these kind of policies provide a sugar high. you list ofook, four stages of destabilization. depopulation. debt. the.ite stable >> de-globalization, democratization. if you look at global markets,
that is not a political -- pretty picture. >> it was also like an outcome of these forces and away, right? in terms of across the board. the weakest economic history. we are seeing this populace revolve take place in many parts of the western world. as far as the western markets are concerned, the picture is very. i've been injured about china. china is impacted by these four things. with a first time, china population is shrinking. china's debt continues to explode on the upside. allah ticks. about i do not think one thing i point out it is popular to believe that you are having all sorts of right-wing extremists come to power. populists come to power. look at how it is evolving in latin america.
the swearing-in in of the new president in peru. i am a world bank under person, and argentina, brazil. entries are adopting very economic policies. margaret conley forces are on the rise in these countries. >> that is morgan stanley's chief global strategist speaking with bloomberg's david westin. we have covered quite a bit of crude oil rice movements and you may have heard gold is still outperforming other precious metals but here is the deal. there are a couple others you need to keep an eye on. i put these up for you on a chart to showcase to still her out performers. you're looking at think and silver. at zincyou are looking and silver.
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